State Bank of India (SBI) has increased domestic retail term deposit and domestic bulk term deposit rates by 15 basis points and 25-100 basis points, respectively, in select maturity buckets in the wake of its credit growth outpacing deposit growth. The new deposit rates are effective from April 13, 2022.

Domestic advances of India’s largest bank rose 13.66 per cent year-on-year (y-o-y) as of June-end of 2022 while domestic deposits grew at a slower pace at 8.05 per cent y-o-y.

The public sector bank has upped interest rates on domestic retail term deposits (below ₹2 crore) on five out of eight maturity buckets (tenors). Among all the tenors, the highest interest rate that the bank is offering is 5.65 per cent on 5 years and up to 10 years tenor.

SBI will introduce domestic retail term deposit of “1000 days” tenor at 6.10 per cent interest with effect from August 15, 2022. This specific tenor deposit will be open for 75 days.

The bank has increased interest rates on domestic bulk term deposits (₹2 crore and above) on seven out of eight tenors. Among all the tenors, the highest interest rate hike (of 100 basis points) is on the 2 years to less than 3 years tenor, with the new interest rate being 5.25 per cent (4.25 per cent earlier).

Domestic bulk term deposits

Within domestic bulk term deposits, the highest interest rate that SBI is offering is 6 per cent (5.25 per cent ) on 1 year to less than 2 years tenor.

Jefferies, in a report, said, “Deposits will see two trends. One, overall growth of around 9 per cent needs to improve to fund credit growth and Government Securities issuances. Two, with reducing system liquidity (from ₹8-9 lakh crore at its peak to ₹1-2 lakh crore now) along with seasonal uptick in credit demand, deposit rates can also rise sharply.

“We see about 50 bps hike in term deposit rates in coming months along with some hike in savings deposit rates as well.”

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